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Monday, March 30, 2009

Our nice little rally is hitting a bump in the road. No surprise as you can see we are up into resistance, the red line, and the seasonal has a minor down tendency for a couple of weeks here. What to do?

I exited my long on Friday, taking profits. I had hoped to get a little more out of that trade than I did. I have several things that are showing potential tops, but the first one shows 4/11 then 5/22 and 6/12. With all that it mind I think this pullback will be a buying opportunity, but not for a couple of days. The seasonal gives us a general idea, but as you can see, it has already been off a little so just becomes a visual crutch. I have found that in general seasonals get followed but at times can stray. As a result it is just one thing to consider, but cannot be the sole criteria used.

The one fly in the ointment which could trump all of this is that the government is doing everything they can to foster a continuing anti business climate. If they continue to do this all bets are going to be off on the downside. I still think we will see new lows, but they rally prior to that I thought would carry further than we have gone so far. It is possible that all of the pro-union anti business planning and out of control spending could cut the rally off short. We have to watch this pullback closely to see.

Monday, March 23, 2009

Here is the cash SP 500. I have gotten several emails about how far will we go? My answer is more about time than price. The two dates that keep coming up are 5/22 and 6/12. I have no idea if these dates are any good, they do not have as much going for them as what I posted when I called this low previously. However, there is a seasonal tendency for highs to be made in that zone so maybe they will be decent targets time wise. As for price, that would be a guess. My short term targets are about 20 SP500 points away in the 838 area but that is more for an exit of a trade than a call for the high.

We are very short term overbought now after today so a decline would not be a surprise at all. I am looking for sell signals as we move up but am currently on the long side of the market.

As we approach May I will give more current posts about when the short term top might occur, for now it is play the long side until we see something that represents a short term reversal, which could come any time but I think the major top will be in May.

Saturday, March 21, 2009

It is time to expose these morons that are telling everyone that Gold has always been a place to go with their money during a financial crisis. It is one thing to just be ignorant, maybe some of these people are, but I suspect many are just lying to try and make money off of this farse. Above, in a terrible graphic display, I have two charts with the Dow Jones average on top and Gold cash underneath. I just can't get this formatted better so this will have to do.

The periods marked with vertical lines are 1974, 1980, 1982, 1987, 2000, 9/11/2001, and July of 2008 when the current crises became pretty well known. As you can see during the first five periods the price of Gold declined. The 2001 period marked the first rise, and the current one is flat so the jury is still out on that one.

This comes as no surprise to someone who trades with real money and is not a paper champion spouting off all this advice to people with no real idea what they are talking about. I cannot afford to as Roger Clemens would say "misremember" relationships like this.

There is a very close relationship between the price of Gold and inflation, so that is where you need to go to base your investment decisions on gold. We have not always had inflation during prior crisis periods which is why there is no relationship here. I implore you to do your own research before investing money into Gold. One of the strangest things I have ever seen is going on with Gold. When it drops 20% it does not seem to count as a drop whereas a 20% drop in stocks prices does count as a 20% loss. How people use this logic is beyond me, if you buy gold at 1000 and it drops to 900 I hate to tell you but you have lost 10%, it does count.

I am not running for election and could care less who I offend with this. If you are offended, you must be one of these people lying to the public to try and make money, I want to offend you.

Thursday, March 19, 2009

They don't make day's like yesterday more than once every several hundred years. This is an intraday chart of 30 Yr Bonds. The large spike represents from high to low about 8 full points, 4 times what was for years the daily trading limit. This occurred in about 15 minutes thanks to the PPT. For those who do not believe in the PPT you should have your head examined after a move like this.

This is going to support this rally for a bit, but bigger picture most of us know this is a very bad development. Bonds have historically been very supportive of stock prices so this move to drive down long term rates should provide support for a time. However, once this steam runs out look out below, a sharp drop is going to occur. Time cycles suggest May but there is no way of knowing for sure. I suggest for those who have not gone to cash to consider doing so in May specifically if prices are higher than today. In my view we are going to take out the years lows again, so we have a nice opportunity to correct a mistake for those who did not go to cash from way above in the 13000 range like some of us did.

There will be a fantastic buying opportunity to buy stocks when this is all over, but it is not here yet.

Friday, March 13, 2009

BARRY... BARRY

Here is an example of what has to be one of the darndest things I have ever seen in my 23 yr trading career, the Barack Short Sale Trade.

Here are the rules, wait for him to speak publicly on any topic during the morning hours of trading, and short the SP 500 immediately at the market. Use a 10 point stop, which has never been hit yet doing this, then trail down or stop to take profits. Posted here is todays trade, it is amazing to me how negative he is for the stock market. Regardless of your political leanings, this is a trade that just has to be done. Alternatively, you can look for short entries in other methods you use once he starts talking, but it is does not need to be that complicated.

For a trading system to be viable it has to be based on fundamentals, in other words, it has to make conceptual sense to expect a good repeating of the results out of sample. In this case, his policies are obviously negative for capitalism, and the market speaks loudly endorsing that. So you have a fundamental, that also winds up being supported by price action, which is what you need to have a technique like this work.

The only danger I see in this is that eventually everyone will figure this out and then it may stop working, but until then, it has never yet had a loss. I have tracked 12 of these so far, with 12 wins and no losses.

Wednesday, March 11, 2009

Missed it by that much! "Maxwell Smart"

Well I called for the 13th or the end of this week or close to it, and it appears it was Tuesday so I was off by a few days. However, in this business calls do not get much better than that if this upward move continues. Will it?

Although I base most of my trading on looking at relationships that have proven themselves over time as predictive, sometimes you have to use good judgement. I had posted previously that many of the other things I would normally require to make a call for a major upmove were missing, I thought this bounce would occur. I do think it will continue, to shake the tree a bit. The world is short except for some buy and hopers still out there. It has been remarkably easy to make big money on the short side, so a squeeze is likely.

After just one day nobody really knows if it will stick or not, but with the seasonal supporting it, I think it will for awhile. For the record, I am not long this market at this point, I am waiting for a sharp continued move to short, or a more sustained move that pulls back and gives me a buy entry. Too early to tell which will occur at this point.

However, for the buy and hopers, a nice move up could give you a chance to switch to cash in your accounts and get back some of your losses before the next move down which could be significant once it starts.

Sunday, March 08, 2009

I thought it would make sense to do a report card on how I have done here recently. As a trader there is no bs your results are measured in dollars and cents, there is no try, make money or lose it.

Here are my recent market calls and then a review of how good or bad they were:

Bonds - I posted selling time on the exact day of the retracement high the market fell from 135 to 123 a $12,000 a contract move, A for that class.

Natural Gas - I stated it was set up for a sell but thought it would drift a bit higher first. It drifted higher for 3 more days then tanked. This was a tad over $9,000 per contract to the low, A as well here.

Gold - I posted that this was good for $100 on the short side on the day the market made a high of 1007.7, the recent low is 900.4, over $10,000 per contract, another A+.

Dollar - I posted that I thought we had a short sale setup that might look marginal after the fact, this was a lousy call as the market has basically chopped around and gone nowhere, up slightly. I also said that if we break out to new highs the market could really take off, jury still out on that one. Overall I would rate this as a D.

Stocks - I have said that I thought we would have a bounce in March, then the next day fine tuned that to March 13th being the low. Obviously we do not know if that is any good or not yet. If I am right here the low should either occur at the end of this week or close to it.

Report Card shows 3 A or A +'s if the plus is allowed, one D and one incomplete. Hard to be better than that overall, if you can win 3 out of 4 times and get moves that large, you can make more money than you can imagine. Let's hope my views continue to be this good!

Thursday, March 05, 2009

My last post that covered Gold could not have been better. I called for itleast $100 down on the day of the high and we have dropped $107 as of yesterdays low. Now what?

I have drawn a horizontal line where I feel there is support in this market, and it is in the 870 area. I do think we will bounce from there. If we don't the huge fraud of this market might finally be revealed. Regardless of what you might read, there is no correlation AT ALL between dropping stock prices and gold prices. Some of the biggest stock drops in history have been followed by huge price drops in GOLD.

I will say this though, it is a cute little fairy tale that has gotten some legs from, I know this will be hard to believe, the people who benefit the most from having it rise! It is the coin dealers and others selling GOLD that are perpetuating this fraud. It is no different from the Real Estate people who kept hyping Real Estate as it rose into the strosphere. Buy now or be priced out forever, etc..

Go ahead and buy it for whatever reasons you might have, just make sure it is not because you think the stock market will continue to decline. If you don't believe me just pull up a chart with the SP 500 at the top and the Continous Gold chart below, and look at all of the extreme decline periods. 9/11 is the only recent period where Gold happened to rise when stocks went down. There is not a consistent relationship here so do not be hoodwinked by these crooks. The best recent line I heard was there is no reason not to pay a $200 premium from the spot price when buying gold coins because we are going top $3000 anyway! I would like to walk in the studio of that dude's radio show and ........ for that discussion he had. Joe Batalia should be called Joe I will Tell you a Tale...ia. Seriously folks is anyone really that stupid that they would pay a premium of that amount on anything in the world right at this point?

Sunday, March 01, 2009

Traveling for a few days so no posts until late in the week. I have revised my call for the March rally to start mid month. I do not expect a big bounce as I stated before, but if we get weakness into that time period, approx the 14th, I will be looking to buy for a short term rally. I expect that rally to be followed by a huge downmove if we even get a rally. When I scroll the S&P 500 I find only one stock that could possibly be a pullback buy, so that tells me that every sector across the board is very weak.

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My wife and I have been dog lovers for many years constantly moving up in the food chain. When we first met she had a Cairn terrier I named Louie after Louis Winthorp in the movie Trading Places. Since that time we have moved up into the world of Saint Bernards and we have found our calling in life. We live on a ranch with a large crew of Saint Bernards mostly from rescues with a few exceptions.

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